How Financially Strong Is BlissCo Cannabis Corp (CNSX:BLIS)?

Donald Bartholomew - finance.yahoo.com Posted 6 years ago
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Investors are always looking for growth in small-cap stocks like BlissCo Cannabis Corp (CNSX:BLIS), with a market cap of CA$48.4m. However, an important fact which most ignore is: how financially healthy is the business? Companies operating in the Pharmaceuticals industry, especially ones that are currently loss-making, tend to be high risk. Assessing first and foremost the financial health is vital. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Nevertheless, given that I have not delve into the company-specifics, I suggest you dig deeper yourself into BLIS here.

How does BLIS’s operating cash flow stack up against its debt?

In the previous 12 months, BLIS’s rose by about CA$1.1m comprising of short- and long-term debt. With this growth in debt, BLIS currently has CA$4.1m remaining in cash and short-term investments for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of BLIS’s operating efficiency ratios such as ROA here.

Can BLIS pay its short-term liabilities?

At the current liabilities level of CA$532.9k liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 8.21x. However, anything about 3x may be excessive, since BLIS may be leaving too much capital in low-earning investments.

CNSX:BLIS Historical Debt September 25th 18
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Does BLIS face the risk of succumbing to its debt-load?

With a debt-to-equity ratio of 13.4%, BLIS’s debt level may be seen as prudent. BLIS is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. Investors’ risk associated with debt is very low with BLIS, and the company has plenty of headroom and ability to raise debt should it need to in the future.

Next Steps:

Although BLIS’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. This is only a rough assessment of financial health, and I’m sure BLIS has company-specific issues impacting its capital structure decisions. You should continue to research BlissCo Cannabis to get a more holistic view of the stock by looking at:

  1. Historical Performance: What has BLIS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at [email protected].